Sime Darby Bhd is considering selling off some of its businesses but will not be spinning off its lucrative units such as plantations as yet for a separate listing on the stock exchange.
Acting president and group chief executive Datuk Mohd Bakke Mohd Salleh said there were a handful of businesses that might be divested or offered to its joint-venture partners to be taken over.
“We have conveyed this (divestment) to some of the partners and the final decision will be made by the end of the first-quarter of next year,” he told reporters after its AGM yesterday.
There had been suggestions by industry experts that Sime Darby should separate its plantations arm from the rest of its businesses. Such a move could be attractive to investors who also want exposure to the plantations business.
Its current six core businesses are plantations, properties, motor, industrial, healthcare and engineering & utilities (E&U).
The conglomerate’s E&U division had caused a provisional loss of RM2.1bil for Sime Darby as at June 30 mainly due to cost overruns in several projects.
Asked if the group would hive off its E&U division, Bakke said there were many opportunities in the oil and gas market, which was part of the E&U division.
He said the division would not venture into the transportation and installation component of the value chain.
“We will focus on what we do best. We will focus on engineering, procurement and construction segments. If clients expect us to provide the entire value chain we will consider strategic alliance with companies that have the expertise,” Bakke said.
He said about RM660mil had been invested in fixed assets linked to the E&U business.
“We need to beef up our competency and ensure that project management aspects of the business is handled properly. We need to properly manage the time, cost and players and, when we wrap up a project, we should be showing profits.”
Earlier at the AGM, chairman Tun Musa Hitam told shareholders the group would be filing a civil action suit by year-end with regards to cost overruns on its E&U division following an internal investigation. The group had also lodged a report with the Malaysian Anti Corruption Committee and submitted its findings to the Securities Commission.
These two bodies have informed Sime Darby that they were conducting further investigations.
“For us, it is just a civil action to recover whatever money that we have lost as a result of mismanagement or misdeed,” Bakke said.
Meanwhile, Sime Darby’s first-quarter ended Sept 30 returned to the black after two quarters in the red due to losses at its troubled E&U division.
Bakke said the first quarter was in “positive territory” and its results were due to be announced on Nov 25.
Sime Darby’s net profit for the year ended June 30 (FY10) dropped to RM726.8mil from RM2.28bil in FY09. Revenue for FY10 stood at RM32.9bil against RM31bil before.
Bakke expects crude palm oil (CPO) prices to range from RM3,000 to RM3,200 per tonne within the next six months.
He said some industry gurus had a more bullish forecast of RM3,000 to RM3,500 per tonne and bearish forecast of RM2,500 to RM2,600 per tonne.
“We will be happy if it remains at this level (RM3,000 to RM3,200) as it is a good price. We are in a good position,” he added.
